CNC’s Otto Fricke looks at the German govt’s new willingness to talk about the UK financial passport

 

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With the German government now getting increasingly active in the debate about where British banks and financial institutions should be domiciled after Brexit, Otto Fricke, Berlin based partner for CNC, and German MP for 11 years, gives his analysis…

What did you expect? For the German Finance ministry to stay silent and wait for the UK government to make a decision? This is not how German “Gründlichkeit” (efficiency, thoroughness) works. Reverberating through the corridors of the Federal Finance Ministry in Wilhelmstrasse, Berlin right now is a sense that Germany has to be prepared if post-Brexit Britain fails to secure passporting for financial services. German Deputy Finance Minister Michael Meister is a calm and level headed politician.

What is Germany really driving at here? Well, at first sight it looks like its government is taking a unique opportunity to boost the chance for Frankfurt to take a bigger slice of the post Brexit cake. And they wouldn’t be the only government or city trying to do that. But that would be a short sighted interpretation. The reality is probably different, and actually a lot simpler.

Supervision is the key word. Germany is a country where control and supervision are more important than in any other European country. During the Banking- and Euro Crisis German politicians and civil servants were heavily criticised for not having had the right supervision in place in the years leading up to the crisis. In a recent interview, the German Deputy Finance minister said that any supervisor “must be able to enforce the rules, and it can only do so on its sovereign territory.”

Reading between these lines you could probably find the path towards a solution. Were the U.K. and the EU able to “bridge the channel” (both literally and metaphorically) between enforcing the rules and respecting sovereign territory. So, what are the rules, and what does sovereign territory mean in this context? That is for politics, and its twin brother compromise, to decide.

Otto Fricke

Otto Fricke

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